Mercury rule could upset energy supply, should be reset

Most Americans would agree that it’s important to strike the proper balance between abundant and affordable energy and responsible standards of environmental performance. But too often in recent years, the energy and environmental balance has been lost. Restoring a sense of equilibrium is important for both the health of the American people and our nation’s economy.

Congress has tasked the Environmental Protection Agency (EPA) with implementing laws to protect public health, and that statutory obligation is entitled to respect. Although the executive branch gets to make reasonable policy calls in performing this duty, it does not enjoy unfettered discretion. In today’s EPA, there seems to be a concerted effort to impose requirements that go beyond what is required. Indeed, in the past few years a growing number of legal and scientific experts from across the spectrum have said that many of the EPA’s actions are overreaching — stifling the energy and natural-resource production the nation needs to restore prosperity and technological leadership, while doing little to improve public health.

ADVERTISEMENT

EPA is now proceeding with an unprecedented litany of new rules whose benefits are murky but whose costs are very real and detrimental to human welfare. The nation can and must do a better job of striking the proper balance. Even in today’s divided times, a broad consensus remains: Achieving affordable and abundant energy coupled with strong environmental standards is the right combination. Most would also agree that energy and environment-related public policy decisions should be based on the facts and informed by rigorous scientific discourse.

Applying this consensus to specific proposals, however, shows that “the devil is in the details.” Too many of EPA’s new rules go beyond what is necessary to enforce our laws and would impose crippling costs with few benefits.

Just a single current example among many is EPA’s recently finalized Mercury and Air Toxics Standards (MATS) rule addressing mercury emissions from power plants. If it is allowed to stand, MATS will put electric reliability at unacceptable risk and raise electricity costs with very little, if any, appreciable benefit to human health. Reasonable regulation is appropriate, and EPA has broad discretion — indeed the obligation — to adopt balanced rules. Unfortunately, EPA’s approach has been aimed at more than its statutory obligations. Through MATS and other rules, EPA wants to influence how investments in energy production are made. And so it has imposed a series of new, incredibly stringent obligations that might not even be achievable.

The Institute of Clean Air Companies, an association representing emissions control technology vendors, has asked EPA to reconsider MATS, saying that “our member companies cannot ensure that the final new source [mercury] standard can be achieved in practice.” And the United Mine Workers of America says its comments “and like-minded [ones] to EPA on the proposed MATS rule were ignored.”

As a practical matter, MATS and other EPA rulemakings are leading to retirements that could total 20 percent or more of the existing coal-fired power plant fleet. Most concerning is that MATS is already leading to challenges for the reliability of electric supply. The North American Electric Reliability Corp., or NERC, the federally certified “electric reliability organization,” stated in a recent report that “environmental regulations are shown to be the number one risk to reliability over the next one to five years.”

EPA’s actions are driving up the cost of electricity, too. PJM, the regional transmission organization responsible for coordinating the movement of wholesale electricity in all or part of 13 states and the nation’s capital, reported two-year capacity price increases of 390 percent, most of which it attributed to the cost of environmental compliance, with a nearly 1,200 percent spike in northern Ohio where the grid will be constrained. PJM also plans for about $2 billion in additional transmission investment to maintain reliability in the face of EPA rules. Clearly, these are significant costs that will be passed onto end-use customers.

The vast majority of the benefits that the EPA claims from MATS are the result of its counting coincidental reductions of “particulate matter” below existing standards EPA already has determined are necessary to protect public health. Emissions of mercury by American power plants have declined over the last 20 years without the MATS rule. EPA itself estimates the annual benefits of mercury reductions attributable to the rule at $500,000 to $6 million and annual costs at almost $10 billion.